Twilio Inc. (TWLO) shares soared nearly 10% on Tuesday after the company reported better-than-expected second quarter financial results. While Twilio has struggled with its reliance on large customer accounts, management projected third quarter revenue of $91 million to $93 million – above consensus estimates of $89.69 million – while full-year revenue guidance of $371 million to $375 million exceeds consensus estimates calling for $359.79 million.
Second quarter revenue increased 48.6% to $95.87 million – beating consensus estimates by $9.63 million – and net losses of five cents per beat consensus estimates by six cents per share. Base revenue – excluding large customer accounts without a year-long minimum contract – jumped 55% to $87.6 million, while total active customer accounts reached 43,431 compared with just about 31,000 during the same time last year. (See also: Twilio In-Line Q2 Loss, Solid View Mitigate Uber Woes.)
From a technical standpoint, the stock broke out from reaction highs made in mid-July to key resistance levels near $35.00. The relative strength index (RSI) reached overbought levels at $71.07, while the moving average convergence divergence (MACD) could see a bullish crossover. The stock has been building momentum since its sharp decline following first quarter earnings, when it issued guidance that was well below expectations.
Traders should watch for a breakout from these key resistance levels to new highs. Over the past 52 weeks, the $35.00 level has been tested three times without a breakout following the stock’s tremendous decline during the middle of last year. The next major resistance after a breakout would be at around $39.00 per share, although a failure to break out could send shares back down to retest support at around $32.50. (For more, see: The Top IPOs of 2016.)
Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.